ORriNiAi

IN THE SUPREME COURT OF THE STATE OF MONTANA

DA 19-0299

SIGNAL PEAK ENERGY, LLC,

Plaintiff and Appellant,

v.

MONTANA ENVIRONMENTAL INFORMATION

CENTER, STATE OF MONTANA BOARD OF

ENVIRONMENTAL REVIEW, ELLEN PFISTER,

and STEVE CHARTER,

Defendants and Appellees.

FILED

JUN 2 3 2020

Bovven Greenwood

Clerk of Suprerne Court

Stat© nf Montana

ORDER

In this matter, Signal Peak, LLC (Signal Peak) has appealed from an order granting

summary judgment to Defendants Montana Environmental Information Center (MEIC),

State of Montana Board of Environmental Review (BER), Ellen Pfister (Pfister), and Steve

Charter (Charter) (collectively, Defendants) on Signal Peak's complaint for declaratory

relief concerning a discovery dispute that arose in a BER contested case. However, upon

a review of the parties' briefing and the administrative record, we have concluded that

procedural irregularities and unresolved administrative issues prohibit the Court from

proceeding on the appeal, including reaching the merits of pending constitutional issues,

and that the case must be remanded for further proceedings before the agency.

On August 11, 2016, MEIC filed a Notice of Appeal and Request for Hearing

("AM3 appeal") with BER challenging the Department of Environmental Quality's (DEQ)

issuance of a coal mining permit to Signal Peak in 2013. Pfister and Charter had provided

comments during the permitting process, are members of MEIC, and separately own

surface lands located above the mining operations proposed by Signal Peak in its AM3

application. After a series of discovery disputes between the parties that required the

06/23/2020

Case Number: DA 19-0299
extension of discovery deadlines, the hearing examiner issued a scheduling order in the

AlvI3 appeal that required remaining discovery to be completed by April 30, 2018.

On March 30, 2018, Signal Peak issued deposition notices and subpoenas duces

tecum for Pfister and Charter, requiring they produce any written communications between

them and entities or associations concerning impacts to water resources located on their

surface lands. MEIC moved to quash the deposition notices and subpoenas on April 17,

2018, arguing that the depositions were inappropriate, unduly burdensome, overbroad by

seeking information that had not been before the DEQ in the permitting process,

improperly seeking privileged communications between MEIC and its members, and

violative of Pfister's and Charter's constitutional rights to associate and petition the

government for redress of grievances. Pfister and Charter joined MEIC's objections, and

Signal Peak opposed the motion to quash.

The hearing examiner conducted a hearing on the motion on May 23, 2018, which

essentially was a discussion between counsel for the parties and the examiner. Except for

a later order simply staying the discovery deadlines pending resolution of the litigation that

the parties would subsequently commence in the District Court, no written order was

entered by the hearing examiner regarding the discovery issues and objections raised by

the parties. The record captures only counsel's discussion with the hearing examiner about

the requested depositions, particularly, the hearing examiner's concern about the

constitutional issues raised within MEIC's motion to quash the depositions:

[A]s a preliminary matter, I have one issue that's burning for me that I want

you all to address. . . based on Montana Supreme Court case law, and

specifically there is the Jarussi case and there are several others that discuss

the separation of powers issue between MAPA and agencies deciding

constitutional issues. In my understanding, I have no jurisdiction to decide

constitutional issues and my inclination, unless you folks can convince me

otherwise, is that that is a question for the District Court to resolve;

So I guess what I need from you then, from potentially everybody, is a

practical solution about how we're going to deal with this First Amendment

problem and the jurisdiction piece of it;

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[I]f we can fashion a solution here that [will] deal with the concerns without

having to go to District Court, that would obviously be preferable. But if

you're going to go to the District Court anyway if the decision is anything

other than a grant of the motion to quash, then you might need to bring the

First Amendment problems to District Court and you can deal with them

anyway. So practically, I need you all to tell me whether you want a decision

from me on this or whether you want me to stay the underlying decision, or

the underlying case while you go to District Court. . . I will give you all until

next Friday. I'm not going to issue an order on this, so just orally I will give

you until next Friday to provide me with supplemental briefing all at the same

time. . . . My inclination is to not address the First Amendment or to make a

record as to why not addressing it, why I don't think it has to be

addressed, it can be avoided, and then to make the ruling on the burden and

the other issues. [(Emphasis added)].

The hearing examiner inquired whether IVIEIC would withdraw its constitutional

challenges, apparently believing this would permit the examiner to enter an order on "the

other issues," namely, the non-constitutional grounds raised for quashing the deposition

and subpoenas, but IVIEIC declined, stating that the "First Amendment concerns here are

paramount." MEIC did advance alternative, non-constitutional arguments that the

subpoenas sought privileged communications, sought information not presented to DEQ

that would be "reopenine the record, were retaliatory, and overly burdensome. In the

discussion, Signal Peak and MEIC appeared to agree that the discovery requests could be

modified to be less burdensome, but also appeared to view the constitutional issues as

primary. The hearing examiner ordered supplemental filings and, on June 1, 2018, the date

the supplemental submissions were due, Signal Peak filed a status report that concurred

with MEIC that "the [h]earing [e]xaminer and the Board of Environmental Review lack

jurisdiction to decide the constitutional issue that the [Defendants] advanced in [their]

Motion to Quash," but contended the Defendants had "presented no legitimate ground for

the putative deponents to avoid their obligations to respond to discovery."

As noted, no written order was entered by the hearing examiner on either the

constitutional or non-constitutional issues raised by the Defendants' motion to quash, and

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after careful review of the record, we can discern no oral ruling on these issues either. In

its briefing to this Court, Signal Peak offers that the hearing examiner "implicitly declin[ed]

to quash the subpoena on the other grounds raised by MEIC, not[ing] that the remaining

constitutional issue could only be addressed by the judiciary, not by the executive branch,"

but we are hard pressed to discern even an implicit ruling. Rather, it appears the hearing

examiner was focused on resolution of the "jurisdiction piece of it," that is, the

constitutional issues that the agency did not have jurisdiction to resolve, and directed the

parties to proceed to the courts for a decision on those issues. Despite expressing an

inclination, the hearing examiner never did "make the ruling on the burden and the other

issues." If Signal Peak's assessment of an implicit ruling was correct, Signal Peak would

have been the prevailing party before the hearing examiner, and yet it was Signal Peak, not

MEIC, that initiated litigation by filing a Complaint for Declaratory Judgment before the

District Court seeking a declaration that "complying with discovery would not infringe the

Defendants' constitutional rights and order the Parties to abide by applicable rules and

respond to discovery." More importantly, no one in this matter seemed to recognize that

resolution of the non-constitutional objections to the discovery by the hearing examiner

was a prerequisite to reaching the constitutional objections. A ruling that the depositions

were improper on these non-constitutional grounds may well have mooted the

constitutional objections.

At a minimum, the hearing examiner was presented with arguments concerning: the

legality of additional discovery at this stage of the proceeding; the scope and burden of the

requested subpoenas and depositions; the potentially privileged communications that

would be encompassed by requests for communications between Pfister, Charter, and the

associations; and the standing of MEC to file a motion to quash on behalf of its members.

As a consequence of the failure to resolve these non-constitutional discovery issues, this

Court has been presented with arguments about administrative procedure for which there

is no final ruling from the agency, or any ruling at all, that provides the agency's decision

and rationale, including its interpretation of governing statutes and regulations. For

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example, the 'parties argue at length about the scope of review for BER proceedings, with

Signal Peak contending that "the BER is not 'confined to the record' relied on by DEQ,

but must receive evidence on any issue raised in the permitting process," citing Admin.

R. M. 1.3.217-221 and 1.3.230 (2020), and MEIC v. DEQ, 2005 MT 96, ¶¶ 13, 22-25, 326

Mont. 502, 112 P.3d 964. Defendants respond that "the only relevant analysis [for a permit

appeal] is that contained within the four corners of the [technical review]. . . . BER is

unambiguous that extra-record evidence is not allowedr citing § 82-4-227(3)(c), MCA,

Admin. R. M. 17.24.405(6), and an administrative decision in In re Bull Mountains,

No. BER 2013-07 SM, 56-57 (Mont. BER, Jan. 14, 2016). The District Court decided

these administrative issues without the benefit of an agency decision or rationale about the

agency's application of its regulations, and then proceeded to decide the constitutional

issues.

While it is correct that the agency cannot resolve constitutional issues, Jarussi v.

Board of Trustees, 204 Mont. 131, 135-136, 664 P.2d 316, 318 (1983), the administrative

scope of review issue presented here, as well as the discovery issues that lie within the

hearing examiner's discretionary governance, such as whether requested depositions are

overly burdensome, must first be addressed and resolved by the agency before judicial

review of any constitutional questions can be undertaken. Otherwise, the parties are

seeking an advisory opinion from the courts on constitutional questions that may never be

ripe or dispositive. "We have repeatedly recognized that courts should avoid constitutional

issues whenever it is possible to decide a case without reaching constitutional

considerations." In re G.M, 2008 MT 200, ¶ 25, 344 Mont. 87, 186 P.3d 229 (internal

citation omitted). Further, "[t]he well-settled principle undergirding the exhaustion

doctrine is that `no one is entitled to judicial relief for a supposed or threatened injury until

the prescribed administrative remedy has been exhausted.'" Shoemaker v. Denke, 2004

MT 11, ¶ 18, 319 Mont. 238, 84 P.3d 4 (internal citation omitted). Consequently, it is

necessary to remand this matter for completion of the necessary administrative process by

the agency. Therefore,

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IT IS ORDERED that this appeal is DISMISSED WITHOUT PREJUDICE. The

judgment of the District Court is VACATED.

IT IS FURTHER ORDERED that this matter is REMANDED to BER for further

proceedings consistent with this order.

The Clerk is directed to provide a copy of this Order to counsel of record, to the

Thirteenth Judicial District Court, and BER.

DATED this 2 3 -ray of June, 2020.

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